First quarter of 2020

The covid-19 pandemic has had a devastating effect on the share price of property companies, with 31% wiped off the value of their total market capitalisation during the first quarter of 2020.

Grainger

Acceleration to scale; NTA premium pricing this

Grainger

AGM statement – good start to the year

Grainger

10% premium to NTA pricing in near-term outlook

Grainger

Acquisition in Cardiff for £57m; 7% gross yield

Another acquisition in East London; PT upgrade

Grainger has announced another forward-funded acquisition within Canning Town, this time a 132-home PRS development in Hallsville Quarter for ~£55m (5.5% gross yield), complementing its existing PRS developments in this area (Argo Apartments, Hallsville Quarter phase 1). We leave our forecasts are unchanged (not updated post yesterday’s prelims), but upgrade our PT from 290p to 305p, pricing the shares at a ~10% premium to EPRA Net Tangible Assets. Buy.

FY19 prelims – earnings 3% ahead of consensus

FY19 prelims have come in line. Key highlights include: NRI ~3% below our forecasts, but offset by disposal profits being ~6% ahead, resulting in an adj. op. profit beat of 3.4% . Adj. PBT was in line with our estimates, and 3% ahead of BB cons. EPRA NNNAV grew 1% LFL to 272p (post rights-issue). With the shares up 33% YTD, and tracking close to our 290p PT (unchanged), we acknowledge the shares are up with events. However, we leave our Buy stance unchanged noting the potential that exists for t

Planning application submitted for Lewisham development

Grainger has confirmed that a detailed planning application to develop on Besson Street (New Cross Gate, Lewisham) has now been submitted as part of its 50/50 JV with the London Borough of Lewisham. The scheme will include 324 new homes (35% affordable), as well as 5,000 sq. ft of amenity space. Subject to planning permission, construction is expected to start in April 2021 with completion anticipated for April 2024. We make no changes to our forecasts and leave our Buy rec unchanged, noting tha

Earnings rebased ~7%/9% for FY20/21e; more conservative stance taken

We update our forecasts for Grainger following the Sept trading update and CMD, revising down our net rental income estimates by ~8%/10% for FY20/21e taking a more conservative view over the lag between passing rents vs. NRI materialised. As a result our adj. PBT estimates fall by ~7%/9% for FY20/21e, which moves us from the top-end of consensus to the middle of the range. We retain our Buy rec and 290p PT, seeing moderate upside (~8%) at current levels noting the recent bounce in the shares ove

£42m acquisition generates scale in Sheffield

Grainger has announced a £42m forward-funded acquisition of a 284- home PRS development in Sheffield (gross yield ~7% on cost), complementing its existing presence in the region. We make no forecast changes at this stage, and with the shares trading at a ~13% discount to our FY20e EPRA NNNAV, we continue to believe this undervalues the company’s sector-leading positioning in the PRS market, reiterating our Buy rating.

Trading update shows good rental growth, leasing ahead of expectations, new acquisition

Grainger has released a trading update to the end of August reporting LFL rental growth of 3.4% (ahead of our forecasted 3% for FY19e), leasing ahead of expectations at its new schemes in Bristol, Manchester & Hampshire, and a complimentary acquisition also in Bristol. We leave our forecasts unchanged at this stage, though we note we are ahead of consensus for FY20 and reiterate our Buy recommendation seeing value at current levels.

Update to £34m forward funded acquisition in Leeds

Grainger has announced that construction has now commenced at its 216-home PRS development in Leeds, which is being forward funded for £34m. The scheme (known as Fabrik) is anticipated to generate gross yield on cost in excess of 6.5% once stabilised, with completion anticipated for late 2021. We highlight the fact that this development builds on Grainger’s existing presence in Leeds (complimenting its 242-home Yorkshire Post development, also anticipated to complete in 2021) giving the company

Earnings rebased 16-22% post interims; maintain strong Buy

Following the interims last week, we rebase our earnings by 15.8% for FY19E and 21% - 22% for FY20-21E to reflect disposal profits in H1 19 being lower than expected, and updated assumptions on net rental income post the interims. We make other small changes (explained below) which repositions EPRA NNNAV from 287p to 283p in FY19E and from 306p to 299p in FY20E. Though we move from the top-end to the middle of consensus earnings, we remain buyers of Grainger seeing significant scope for a re-rat

H1 19 Interims; 6% PBT fall due to sales timing

Grainger’s interims reported net rental income of £29.1m (up 33% YoY, +3.6% excluding the GRIP consolidation) and underlying PBT of £38.3m (- 6% YoY due to the timing of residential sales, as previously indicated). EPRA NNNAV was reported at 271p (up marginally from a restated 270p at Sept 18, which our calculations assumed would be 277p). The company has also declared an interim dividend of 1.73p (up 10% YoY) but below our original forecast of 1.96p due to the impact of right issue restatement.

LIBERUM: PayPoint: Growth is not priced in

DSW Capital+ (DSW, House Stock at 51p) - H1 results –promising outlook

Octopus Renewables Infrastructure

ORIT: renewables diversified across stage, technology, and geography…

A tough year, but clear fundamental value

AUM closed FY23 (30 Sep 23) on £37.4bn, 5% up y-o-y. Net flows were slightly negative (-£92m or -0.3% of opening AUM), with investment performance adding £1.8bn. It’s been a tough year for asset managers, but in a London-listed peer group, Impax recorded the second-strongest net flow rate (median -7%, see note). Some experienced heavy (double-digit) net outflows. A profit fall was due to adjusted operating costs increasing faster than revenue, by 11% from £108.0m to £120.3m. Part of this increas

Lifesafe (LIFS) - Strong growth but downgrades nonetheless as we await industrial fluid

LIFS' announcement this morning discloses strong revenue growth, with sales in the first eleven months up 62%, highlighting the attractiveness of their innovative fire products. These have made them leaders on Amazon both in the UK and in the substantial US market, where they were successfully launched early last year. However, disappointing sales from one partner, combined with enhanced competition, have caused a pull-back in sales forecasts combined with increased losses in the current year; a

H1'24 results: strength of the model evident

Morning Note – 30 November 2023

Vanquis Banking Group+ (VANQ, House Stock at 112p) - Adding flesh to the bones

Around the World in Eight Ideas - Investment Trust Opportunities Beyond the UK

Although the UK now represents a paltry 3.5-4.0% of global equity indices, home bias in the domestic stock market is estimated at c 25% across institutional and retail investors. This persists across asset classes: in the Investment Association universe of open-ended funds, 28.1% of total AUM at the end of September 2023 was invested in UK sectors. This leaves a significant amount of investors' assets exposed to overseas markets that may be unfamiliar and harder to access. In such a situation, t

LIBERUM: DF Capital: Taking a prudent view on the refinancing of the major dealer

Hardman & Co Insight: Higher interest rates overshadow IIC/REIF prospects

Hardman & Co Research’s focus is on the nine quoted infrastructure investment companies (IICs) and on the 22 renewable energy infrastructure funds (REIFs), most of which saw their share prices fall during 2022, while the FTSE 100 rose by just 0.9%. In our Quoted UK Infrastructure and Renewable Energy – Prospects for 2023 publication, we have addressed the three key issues of recent months: higher inflation, extremely volatile power prices and rising interest rates.

Delivering growth in uncertain markets

Positive interims from Vp this morning highlight another period of growth despite the mixed market backdrop. The results again illustrate the benefit of Vp’s diverse mix of specialist activities, with the quality of earnings confirmed by further growth in operating margin (now 13.9%) and ROCE (14.7%). Strategic priorities include continued progress with ESG initiatives and a greater emphasis on Digital, with more on this likely to follow later in the year. We maintain our Fair Value estimate o

Duke Royalty - In Royal Health

Duke has released its H1/24A interim results for the period ending 30th September 2023 that are in-line with expectations. Recurring cash revenues increased 17% to £12.2m, whilst total cash revenues increased 35% to £14.1m. The portfolio continues to be resilient despite macroeconomic headwinds, and c£18m of capital was deployed across new and existing investments. We iterate a 1-year price target of 45p based on a target FCF yield of 8%.

Agronomics - A unique offering in a rapidly developing sector

Agronomics (ANIC) invests in cellular agriculture companies. Since mid-2022 it has placed increasing emphasis on companies using precision fermentation technology or providing contract precision fermentation services, as these appear to have greater near-term commercial potential than cultivated meat and seafood. Agronomics’ NAV has risen almost 100% since the inception of the current strategy in April 2019, and looks set to increase further as the company’s portfolio holdings receive regulatory

Critical Metals plc releases its Final Results

Key Points CRTM reported a loss of £2.7M for the 12 months ending 30 June 2023. Increased indirect ownership of the Molulu project from 40% to 70%, streamlining the corporate structure. Commenced copper ore production at Molulu in January 2023. In October 2023, the Company announced that it had entered into an off-take agreement with O.M Metal & Resources S.A.R.L, for a minimum of 20,000 tonnes of copper oxide ore. Raised £600,000 at a price of 25p per share and raised a further £1.3M at 25p per